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Budget 2015: 'Britain deserves a pay rise'

BUDGET 2015: Chancellor George Osbourne in the House of Commons today (July 8)

CORPORATION TAX will be cut to 18 per cent by 2020, Chancellor George Osbourne has announced.

“Britain is open for business,” he said as he delivered today’s budget in the House of Commons.

He outlined that standard business tax will fall from 20 per cent to 19 per cent from 2017 and to 18 per cent from 2020.

“We are giving businesses the lower taxes they need to grow with confidence,” he said.

However, he attacked a number of loopholes used by businesses including new measures to increase the tax take from so-called controlled foreign companies: overseas divisions of multinationals taxed at a low rate.

He also moved to stop companies using the trick of setting up separate companies for each of their employees in order to save their National Insurance bills.

Aidan Sutton, partner at PWC, said: “The Chancellor is shutting down tax abuse, which has to be welcome.”

Osbourne also vowed to make Britain a low-tax, high-wage economy as he promised to finish the job of fixing the economy.

He announced the creation new National Living Wage of £7.20-an-hour rising to £9 by 2020, declaring: "Britain deserves a pay rise."

The amount workers can earn before paying income tax will also rise to £11,000 from next year, while 130,000 people will be taken out of paying the 40p rate.

But he took aim at Britain's welfare state, warning people able to work should look for a job and take it when it is offered.

Working age benefits will be frozen for four years, after years of handouts rising faster than wages for those in work. Tax credits will only be offered for the first two children in families.

Another £37billion of savings need to be made, including £12billion from welfare and £5billion in a crackdown on tax avoidance.

Families receiving tax credits will bear the brunt of efforts to raise £12billion from the welfare budget, while school leavers will lose benefits if they refuse to 'earn or learn'.

Unveiling plans for the National Living Wage, Mr Osborne said: 'Britain deserves a pay rise and Britain is getting a pay rise.

“I am today introducing a new National Living Wage. We’ve set it to reach £9 an hour by 2020," he said.

“The new National Living Wage will be compulsory. Working people aged 25 and over will receive it. It will start next April, at the rate of £7.20.”

Key announcements included:

• Maintenance grants for poor students to be axed and replaced with loans from 2016-17
• Tax credits limited to the first two children while better-off families will lose payments
• High earners banned from getting rent discounts to live in council and social housing
• Rents in social housing to be cut by 1 per cent every year for the next four years
• An apprenticeship levy will be introduced on all firms, who can get the money back if they hire apprenticeships
• New Vehicle Excise Duty bands introduced for new cars costing £140-a-year to generate cash for a Roads Fund to repair the highways
• An extra £8billion for the National Health Service to ensure a 'strong seven day a week NHS'
• £17billion to come from spending cuts, including 1 per cent pay rises in the public sector for the next four years
• Temporary non-dom tax status will abolished, raising £1.5billion because 'British people should pay British taxes in Britain'
• £37billion of savings needed, including £12billion to be cut from the welfare budget
• Fuel duty will remain frozen this year, after being held flat since 2020, in a boost for motorists
• Inheritance tax scrapped for families to leave loved ones up to £1million
• Working age benefits frozen for four years and new claimants of the Employment Support Allowance will be offered the same amount as those on Jobseeker's Allowance

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